The Effect of Unemployment Compensation on the Reemployment of Recipients.

Although research has clearly demonstrated that Unemployment Compensation introduces a reemployment disincentive, researchers disagree on the importance of this effect. The dispute arises partly because estimates of the effect of UC generosity on unemployment spells vary, and partly because different researchers describe similar estimates in different ways. Regardless, reemployment disincentives are inevitable in that they pay recipients for staying unemployed. The task of policymakers is to balance that disincentive against the need to provide adequate assistance to the unemployed. Notes that (1) expanding the generosity of UC lengthens unemployment spells, (2) state UC policies can shorten UC spells, and (3) reemployment bonuses can generate modest reductions in UC spells but are generally not cost-effective.